MasterCard Security Alert

7 specific things you can do to protect yourself from MasterCard and other credit card fraud and identity theft: Internet ScamBusters™ #132

Today’s issue, not surprisingly, is on the MasterCard security alert that occurred

late last week, in which a security breach placed up to 40 million credit card numbers at risk for fraud.

We decided to devote today’s issue to giving you specific steps you can take to protect yourself from security breaches such as this MasterCard security alert.

Let’s get started…

MasterCard Security Alert: Specific Things You Can Do to Protect Yourself From Credit Card Fraud and Identity Theft

The largest security breach to date occurred late last week when 14 million MasterCard and 22 million Visa credit card numbers were hacked. Up to 40 million credit card users may now be at risk of fraud from their MasterCard, Visa and other credit cards.

The security breach took place at CardSystems Solutions, a third-party transaction processor for merchants and financial institutions.

It appears that the breach was caused by a hacker who gained access to CardSystems’ database and then installed a virus-like script that captured customer data. The F.B.I. is investigating the security breach.

According to MasterCard, names, credit card numbers, expirations dates and the three or four digit credit card security codes were stolen. Social Security numbers, birth dates or other highly sensitive personal data were not part of the security breach.

MasterCard said that only 68,000 of the 13.9 million MasterCard holders were at “a higher level of risk.”

MasterCard, as well as some other credit card providers, have zero-liability policies, so consumers who find unauthorized charges made on their credit cards will not be responsible for paying for the charges.

This security breach is simply the latest, albeit the largest, in a long line of breaches reported this year. Security breaches or lost computer tapes have been reported this year by ChoicePoint, LexisNexis, Citigroup, Bank of America, Stanford University, United Parcel Service, and many others.

Since there have been a relentless string of security breaches — both online and offline — this year, we offer 7 specific suggestions of things you can do to help protect yourself from credit card fraud and identity theft:

  1. Check all your credit card and bank statements very carefully. If you have access online to your credit card charges and/or bank accounts, we recommend you check your statements frequently so you can spot problems as early as possible.
  2. If you find any unauthorized charges on any of your credit cards, notify your card issuer immediately.
  3. If you discover a problem, follow the advice in our article: “What to Do if Your Credit Card or Wallet is Stolen.”
  4. Consider using one-time use credit card numbers, called “controlled payment numbers” or “virtual account numbers,” for your online purchases. Controlled payment numbers help protect your privacy and your security. They are substitute numbers that let you shop online without using your real credit card number.Typically, controlled payment numbers expire after one use (although their use can be extended for repeating monthly bills). These substitute numbers link back to your credit card number without you ever having to reveal your actual credit card number when you shop.The benefit is that if the substitute credit card number is stolen, such as in this case of the 40 million MasterCard and other credit card numbers, the substitute number would be worthless and your real credit card number would not be compromised.Currently, we know of two credit card issuers who offer this service: Citibank and Discover Financial Services. MBNA Corp. and others may also offer this service (however, we could not find a public link).For more info, visit:

    Citibank (Virtual Account Numbers) Discover Card (Discover Deskshop).

  5. Consider purchasing a credit monitoring service. These services typically offer periodic copies to your credit reports so you can monitor your credit file, email alert notifications of key changes in your credit reports, identity theft insurance, and personal customer service help.All three major credit reporting companies offer these services. They are not inexpensive. The service we now personally use is Equifax Credit Watch Gold.(Please note that this is an affiliate link, so ScamBusters does earn a commission if you purchase this service by clicking on this link. This means you are helping to financially support Internet ScamBusters with your order.)Note: Some people have very strong negative feelings about these services. They believe these services should be free to everyone, and that having to pay for them is completely unfair. We respect that opinion.Our belief is that regardless of whether or not these services *should* be free, the fact is that they aren’t. So, we believe the more practical question now is whether or not these services provide sufficient value to you to be worth the not inconsequential cost.Personally for us, because of all the security breaches this year — both online and offline — the answer is now that it is worth it to us. It may or may not be for you.
  6. Consider putting a ‘fraud alert’ on your credit file with the major credit card bureaus as a precautionary measure.A fraud alert is an alert that the three major credit reporting companies attach to your credit file that alerts creditors that your private financial information has been, or may be, compromised.This free service alerts creditors to use additional steps to verify your identity before opening new accounts in your name.When you place a fraud alert with one of the three major credit reporting companies, they will automatically notify the other two companies on your behalf, so you don’t need to place the alert with all three.In addition to flagging your account with a fraud alert, your name will also be removed from pre-screened offers for credit cards and loans. And, you may well be able to receive free copies of your credit report from all three major credit monitoring companies.Placing a fraud alert does not damage your credit. You can remove the alert by calling the number on the credit reports you receive.

    There are certainly drawbacks to placing a fraud alert, including that getting new credit cards and other credit may be more difficult. For example, a fraud alert may limit your ability to get instant credit for in-store purchases.

    Creditors are asked to call you at a designated phone number before opening new accounts, and you may be required to show additional identification when opening new accounts.

    Another drawback is that a fraud alert may not prevent a scammer from opening a new account in your name. Creditors are asked to call and verify all credit applications made in your name before they open any new credit account or grant any new credit. However, creditors are not required by law to contact you. In other words, fraud alerts can legally be ignored by creditors.

    Placing a fraud report is done by an automated system — it is almost impossible to speak to a human being. Here are the three agencies and their phone numbers:

    Equifax: 1-800-525-6285

    Experian (formerly TRW): 1-888-397-3742

    Trans Union: 1-800-680-7289

    For more information, visit the FTC website.

  7. Reread our article called “Credit Card Fraud: 21 Tips to Protect Yourself,” and follow the advice.We highly recommend that you seriously consider each of these items involving your MasterCard and other credit cards, and take action on all that make sense for you to protect yourself from credit card fraud and identity theft.